Stryker Earnings Preview

Stryker (NYS: SYK) only managed to meet estimates last quarter, but investors hope that it will surpass expectations this quarter. The company will unveil its latest earnings Wednesday. Stryker is a medical technology firm that produces medical implants, surgical technologies and emergency medical equipment.

What analysts say:

Buy, sell, or hold?: Analysts strongly back Stryker, with 21 of 27 rating it a buy and the remainder rating it a hold. Analysts like Stryker better than competitor Zimmer Holdings overall. Wall Street has warmed to the stock over the past three months, with analysts increasing their endorsement from hold to moderate buy.

Revenue Forecasts: On average, analysts predict $2.04 billion in revenue this quarter. That would represent a rise of 15.3% from the year-ago quarter.

Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.89 per share. Estimates range from $0.86 to $0.92.

What our community says:CAPS All-Stars are solidly behind the stock with 98.3% assigning it an "outperform" rating. The community at large concurs with the All-Stars with 97.9% granting it a rating of "outperform." Fools are keen on Stryker and haven't been shy with their opinions lately, logging 368 posts in the past 30 days. Stryker has a bullish CAPS rating of five out of five stars that is about on par with the Fool community assessment.

Management:Stryker's profit has risen year over year by an average of 9.1% over the past five quarters. Revenue has now gone up for three straight quarters. The company's gross margin shrank by 4.2 percentage points in the last quarter. Revenue rose 16.3% while cost of sales rose 32.2% to $712.8 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

65.2%

65.8%

68.7%

69.4%

Operating Margin

19.6%

21.0%

19.4%

26.6%

Net Margin

15.1%

15.3%

14.8%

19.1%

For all our Stryker-specific analysis, including earnings and beyond, add Stryker to My Watchlist.